A Year in the Life of a Compliance Officer (SMF16)

Ask what a compliance officer does and the answer is usually a list of responsibilities: oversee compliance with the regulatory system, advise the business, report to the board. At firms within the Senior Managers regime, the person holding those responsibilities holds the compliance oversight function, SMF16, and needs the regulator’s approval before they start.

A list of responsibilities doesn’t show what the job feels like. The role has a rhythm: work that comes round every year, work that arrives without warning, and a steady stream of questions from the business in between. Understanding that rhythm is the best way to judge how much time the role needs and what kind of person can do it well.

This article follows a compliance officer at an illustrative small or mid-sized regulated firm through a typical year. For the hiring side, including permanent, interim and fractional options, see SMF Capital’s page on compliance officer recruitment (SMF16).

The Constant: Advising the Business

Underneath everything else, the compliance officer spends a large part of every week answering questions. Can we say this in a client letter? Does this new product need a target market assessment? Is this complaint a breach? Can this adviser sign off that case? Much of the value of a good compliance officer lies here, in quick, practical, correct answers that let the business move without creating risk.

It is also the part of the role that most easily crowds out everything else. A compliance officer who spends the whole week fielding questions will fall behind on monitoring, policy and board reporting, which is why time and support matter so much.

Regulatory Change

The regulator publishes a steady flow of consultation papers, policy statements, Dear CEO letters and supervisory findings. The compliance officer has to track what is relevant, assess its impact on the firm, and make sure the business changes in time. In some years that is routine. In others, such as the arrival of the Consumer Duty or the recent reforms to the Senior Managers regime, it dominates the year.

Financial Promotions

At many firms the compliance officer approves, or oversees the approval of, every financial promotion: website copy, adverts, social media posts, brochures and client communications. It is detailed, deadline-driven work, and marketing teams rarely leave much time. SMF Capital’s guide to financial promotions and the compliance officer’s role covers what is involved.

Breaches, Complaints and Notifications

Things go wrong at every firm. The compliance officer has to make sure breaches are recorded, assessed and, where required, notified to the regulator under its notification rules. They oversee how complaints are handled against the complaints rules, look for root causes, and make sure lessons reach the business. These are the moments when the compliance officer’s judgement and independence are tested most directly.

Monitoring

Throughout the year, the compliance officer runs or oversees a risk-based programme testing whether the firm does in practice what its policies and the rules require. At smaller firms they often carry out the reviews themselves. SMF Capital’s guide, Compliance Monitoring Explained, covers programme design, testing and board reporting in detail.

The Annual Cycle

Alongside the constant work, a set of fixed tasks comes round each year. The timing varies by firm, but a typical pattern looks like this:

At firms where the compliance officer is also the MLRO, the annual MLRO report, the business-wide risk assessment and, for some firms, the REP-CRIM return are added to that list. That combined workload is one of the main reasons firms eventually split a combined SMF16 and SMF17 role.

The Things Nobody Plans For

Then there are the events that arrive without warning: a regulatory visit or information request, a significant complaint, a whistleblowing report, an adviser who leaves under a cloud, a new product launch brought forward, an acquisition. Each can take weeks of the compliance officer’s time. A role sized only for the planned work will always struggle when one of these lands.

What the Year Tells You About Hiring

Looking at the role across a year makes several things clear for firms planning an appointment.

Time matters as much as seniority

Firms sometimes hire an experienced compliance officer but give them too few days, or too many other duties. The regulator looks at whether the arrangement gives the firm enough senior oversight for its size and risks. A part-time compliance officer can work very well at smaller firms, but only if the days cover the annual cycle, the daily advice and some headroom for the unexpected.

Breadth beats narrow depth at smaller firms

At a small firm, one person covers advice, promotions, complaints, monitoring, regulatory change and board reporting. A candidate with deep expertise in one area but little exposure to the others may struggle. Larger firms can afford specialists; smaller firms need generalists with sound judgement.

Independence and influence

The compliance officer has to say no sometimes, and be listened to. Candidates should be able to describe times they challenged the business, how they did it and what happened. Firms should check that the role has the standing and the reporting line to make that possible.

Sector experience

The rhythm differs by sector. A wealth manager’s compliance officer spends more time on suitability and ongoing advice; a consumer credit firm’s on affordability and arrears; a payments firm’s on safeguarding and financial crime. Matching experience to the firm’s activities shortens the time it takes a new compliance officer to become effective. SMF Capital’s article on the first 90 days for a new MLRO or compliance officer sets out what that early period should look like.

Summing Up

A compliance officer’s year is a mix of steady advice, fixed annual tasks and events nobody saw coming. Firms that understand that rhythm are better placed to decide how much time the role needs, whether one person can also act as MLRO, and what experience to look for. For a full overview of SMF16 appointments, including what SMF Capital looks for in candidates, sector experience and how approval works, read compliance officer recruitment (SMF16).